Athletes tax their bodies.  The U.S. taxes athletes.  As Yakov Smifnoff might say, “What a country!”

To put it plainly the IRS defines income as ‘everything unless we specifically say it’s not.’  There’s a method to the madness.  Imagine a scenario where a handful of specific items are classified as income.  The result is we’d all scramble to find a plausible way to argue our income doesn’t fit the IRS definition and, therefore, is not subject to income taxes.

Sound silly?  The insurance industry does this all the time.  Take a look at your homeowner’s policy and find out if you have ‘all risk’ or ‘named perils’ coverage.  All risk is just that.  If you have named perils (fire, wind, vandalism, etc) you can bet the insurance company will try to avoid writing a check if you file a claim as they try to classify your loss as something other than one of the ‘named perils.’

Taken to its logical conclusion the gold, silver and bronze medals won by our Olympic athletes are taxable income.  Gold medals are valued at $675 whereas silver and bronze are $385 and less than $5 respectively.

The madness doesn’t stop there.  Winning athletes receive honorariums that are taxable.  An athlete winning a gold medal will receive a $25,000 cash payment.  Silver and bronze medalists can expect $15,000 and $10,000 respectively.

Fame surely has its price.  Michael Phelps will be remembered as the most decorated Olympic athlete ever.  His totals? – 18 gold, 2 silver and 2 bronze medals.  Assuming a 35% top tax rate his Olympic career will have cost $175,000 in income taxes.